Cartoon: À la carte
“À la carte” by Ian Foley
This new cartoon illustrates how the drop in easy venture capital money may well result in feisty new fintech start-ups being acquired or forced to merge.
Over the last ten years, fintech’s have talked a big game about how they will take market share from the incumbent players and address underserved niches. However, in the US, I believe their impact has been negligible. For example, the country’s largest neobank has only 13 million customers – less than 10% of the market – and the largest digital lenders have less than 5 million customers each.
With the venture capital faucet turning off and low customer numbers/revenue, we may now see many fintech’s acquired by incumbents (e.g. banks) and well-funded adjacent market entrants (e.g. PayPal and Intuit). The acquisition rationale will likely be acquiring product innovation and talent rather than market share, so expect the acquisition multiples on revenue to be high single digits (not the 20x we saw in 2021).
You can find more of Ian’s cartoons here.